Proforma Invoice: What It Is and When to Use One

2026-11-12

A proforma invoice is a preliminary bill sent before goods or services are delivered. It shows what the buyer will be charged, but it is not a demand for payment and it does not go in your books as a sale. Think of it as a detailed, good-faith preview of the final invoice.

"Pro forma" is Latin for "as a matter of form". You may see it written as proforma, pro forma or pro-forma, and they all mean the same thing. It is useful when a buyer needs paperwork before the sale is final: to get internal approval, to arrange a payment in advance, or to prepare goods for shipping.

Proforma invoice vs invoice vs quote

These three documents are often mixed up. The difference is what each one commits you to.

So a typical sequence is: quote, order, proforma if needed, delivery, invoice.

When to use a proforma invoice

The buyer needs internal approval. Finance teams and purchasing departments often need a document with full details before they can raise a purchase order.

You need payment in advance. A proforma gives the buyer something official to pay from when you want payment before you begin. You then issue the true invoice when the money arrives or the work is done.

Goods are crossing a border. A buyer may need a proforma to arrange an import licence, a letter of credit or foreign exchange, and a customs broker may use one to prepare early. Customs usually wants a commercial invoice for the final shipment, so check with your broker or freight forwarder.

The final amount is not settled. If weights, quantities or hours may shift a little, a proforma shows your best estimate without creating a bill you later have to correct.

You are setting up a new customer. A proforma lets a new client see exactly what their invoices will look like and check names, addresses and purchase order details first.

You do not need one for routine, repeat work on agreed terms. An invoice will do.

What to include on a proforma invoice

Include everything that will be on the final invoice, and make it obvious what the document is.

• The words "Proforma invoice" in large type at the top.
• A note such as "This is not a tax invoice." In the UK, write "This is not a VAT invoice" instead; your accountant can confirm the wording.
• Your business name, address and contact details.
• The buyer's name, address and any purchase order number.
• Issue date and a date until which it stands.
• A reference number, kept apart from your invoice numbers.
• A description, quantity and unit price for each item.
• Subtotal, estimated tax, shipping and total.
• Currency.
• Payment terms and how to pay, if you want payment in advance.
• Expected delivery date.

For goods crossing a border, a buyer or broker may also ask for the country of origin, product codes, weights and delivery terms such as those known as Incoterms.

A simple proforma invoice layout

PROFORMA INVOICE Not a tax invoice.

From: {your business, address} To: {customer, address} Reference: PF-0142 Date: {date} Valid until: {date}

Item	Qty	Unit price	Total
{description}	10	120.00	1,200.00

Subtotal: 1,200.00 Estimated tax: 96.00 Total: 1,296.00

Terms: {for example, 50% in advance to confirm the order} How to pay: {bank details or payment link}

What happens after a proforma invoice

1. The buyer approves it, or asks for changes.
2. They may send a purchase order or a payment in advance.
3. You deliver the goods or do the work.
4. You issue the real invoice, with its own number from your invoice sequence.
5. If they paid in advance, you show that payment on the invoice, and the balance falls to zero or to what remains.

The money you received in advance is a liability on your books until you deliver, not a sale. Your accountant can show you how they want it recorded.

Common mistakes

• Treating it as a sale. A proforma does not go into revenue or receivables. Your records should show no sale until the real invoice exists.
• Using an invoice number. It breaks your sequence and confuses everyone. Use a separate prefix such as PF.
• Not labelling it. A document that looks like an invoice may get paid twice or booked by the buyer's accounts team.
• Forgetting to raise the true invoice. The buyer usually needs it for their records and tax, and you need it for yours.
• Claiming tax back on one. A buyer usually cannot use a proforma for that, because it is not a tax invoice.
• Letting it stand forever. Include a date, because costs and exchange rates move.

Is a proforma invoice legally binding?

Generally, a proforma is not a demand for payment. But it may still carry weight as an offer if a buyer accepts it, particularly when it states prices and terms and the buyer acts on it. Treat what you write on it as something you are willing to stand behind, and if a deal is large or cross-border, ask a lawyer how it should be worded.

How this works in Pacten

Pacten does not have a document called a proforma. The closest is a quote, which is a priced estimate with your line items and terms. It creates no debt and posts nothing to your ledger, which is how a proforma should behave. You can send it for approval first, then raise the invoice when you are ready.

If you need money up front, a deposit request is the better fit. It gives the client a payment link, and a booking can wait on it until you confirm payment. A deposit request is a separate document, and Pacten books it as income when you issue it, not as a liability. It does not come off a later invoice automatically, so raise the final invoice for the balance and ask your accountant how to treat it. A payment plan on one invoice keeps it all together, and recording money in covers how payments count.

If a buyer specifically needs the word "proforma" on the page, for customs or a letter of credit, you would need to prepare that document separately, because Pacten's document layout and names are fixed. There is no template designer. Tax returns and customs paperwork stay outside Pacten, and it works alongside your accountant's tools.